Stock Funds See Inflows as Growth Fears Abate

A trader on the NYSE floor Friday, as major U.S. stock indexes ended with three consecutive weeks of declines.
Photo:

Richard Drew/Associated Press

Sept. 13, 2019 6:42 pm ET

Investors have jumped back into stock funds as trade tensions with China showed signs of easing, reversing a long stretch of outflows.

Global equity funds saw $14.4 billion in inflows in the week ended Wednesday, the most since March 2018, according to a Bank of America Merrill Lynch analysis of EPFR Global data. That follows seven consecutive weeks of outflows.

After a volatile August that rattled stock and bond markets, major U.S. stock indexes have climbed for three consecutive weeks, putting the Dow Jones Industrial Average and S&P 500 within about 0.6% of their all-time highs. A thaw in trade tensions with China and hopes for central-bank stimulus have led to investors’ surge in optimism.

“I think there’s a host of things that have come together in the last two to four weeks that at a minimum could have investors revisiting whether they should be as bearish on stocks and bullish on bonds as they’ve been,” said

Jim Paulsen,

chief investment strategist for Leuthold Group.

Investors also added $5.4 billion to bond funds in the latest week, according to the BofA Merrill Lynch analysis.

After dropping for much of August, government-bond yields around the world have risen in recent sessions. The yield on the 10-year Treasury note capped off its biggest one-week yield gain since June 2013, rising to 1.901% Friday.

“We have a tremendous rotation going on in the market,” said

Dave Lutz,

macro strategist with JonesTrading.

Investors also pulled $800 million from gold funds, suggesting an increased appetite for risk. Gold prices are down nearly 4% since hitting a six-year peak earlier in the month.